The Morning Call--Yellen says 'go big'

 

The Morning Call

 

1/20/21

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/yellens-go-big-narrative-sparks-big-tech-bond-bullion-bitcoin-gains

 

            Signs of exuberance.

            https://www.zerohedge.com/markets/signs-exuberance-warn-correction

 

            Madness of the crowds.

            https://www.zerohedge.com/the-market-ear/c0k5-m8yah

                       

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications fell 1.9% while purchase applications were up 7.2%.

 

                        International

 

December German PPI was +0.8% versus estimates of +0.3%; UK CPI was +0.3% versus +0.2%, core CPI was +0.3% versus +0.2%; EU CPI was +0.3%, in line.

 

                        Other

        

                          The economy’s growth obsession.

                          https://americanconsequences.com/the-economys-growth-obsession-kim-iskyan/

 

                          Consistency about elasticities.

                          https://marginalrevolution.com/marginalrevolution/2021/01/consistency-about-elasticities.html

 

         Fiscal Policy

 

           Yellen to congress: go big.  As you know, one of my thesis for lo these many years is that passed a certain level (Rogoff and Reinhart says 90%) the national debt/GDP ratio has proven to inhibit economic growth.  The reason is simple---we have to spend so much money servicing the debt that it limits the amount that can be used to invest in increased productivity (i.e., economic growth).  Well, the US is will beyond the 90% level and it appears that with the ‘go big’ agenda it is only going to get higher; and, therefore, pose an even greater burden on the economy.  To be fair, whatever portion of the new ‘go big’ program is for infrastructure (productivity enhancing projects) that is a positive for growth.  But as I read the list of proposed expenditures, productivity enhancing projects are in woefully short supply.  The bottom line being while a new infusion of cash into the economy may get investors jiggy in the short term, longer term it just provides further support for the thesis of higher debt = lower growth.

           https://www.zerohedge.com/economics/watch-live-janet-go-big-yellen-cheerleads-biden-fiscal-largesse-nomination-hearings

 

           Problems with the pandemic relief bill.

           https://www.nationalreview.com/2021/01/joe-bidens-pandemic-relief-bill-is-a-mess/

 

           Increasing income tax progressivity may increase growth.

           http://econbrowser.com/archives/2021/01/guest-contribution-increasing-income-tax-progressivity-trickle-up-not-trickle-down-economics

 

         Bottom line.  Be cautious with small cap stocks.

            https://www.advisorperspectives.com/commentaries/2021/01/19/nfib-survey-sends-a-strong-warning-about-small-cap-stocks

 

           An actual bubble is unmissable.

           https://mylesudland.substack.com/p/spac-ev-bubble-2021

 

           Where Wall Street thinks the biggest bubbles are.

           https://www.zerohedge.com/markets/where-wall-street-thinks-biggest-bubble

 

           Know your risk management.

           https://www.zerohedge.com/the-market-ear/c0zgvnno0j

 

    News on Stocks in Our Portfolios

 

Fastenal (NASDAQ:FAST) declares $0.28/share quarterly dividend, 12% increase from prior dividend of $0.25.

 

What I am reading today

 

            Deconstructing bitcoin.

            https://integratinginvestor.com/deconstructing-bitcoins-zeal-into-investible-theses/

           

            The monopoly power of Facebook and Google.

            https://promarket.org/2021/01/18/facebook-whatsapp-terms-of-service-ads-data-privacy/

 

            Wednesday morning humor.

            https://www.zerohedge.com/markets/fire-crotch-gwyneth-paltrows-vagina-scented-candle-explodes-sets-uk-home-ablaze

 

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Tuesday Morning Chartology

 

The Morning Call

 

1/19/21

 

The Market

 

    Technical

 

            As you can see, on Friday, the S&P challenged a very, very short term uptrend.  That is probably not a big dead because as you can also see it has done so twice before and regained the trend line.  Further, it remains above both DMA’s and in uptrends across all but that very, very short term uptrend.  So, it will take some serious whackage before this chart starts to show weakness.

            https://www.zerohedge.com/the-market-ear/cmxq9h1msg

 

            Stocks have retreated from overextended technical position.

            https://www.zerohedge.com/the-market-ear/c7imgcb6z6

 

 

            I printed the long term chart of TLT last week which showed it still solidly in uptrends across all timeframes except the very short term trend.  Nearer term though it has successfully challenged both DMA’s.  So, there is some momentum to the downside.  I do not think you disturb long term positions.  But with the rising concern about inflation, we need to keep a careful eye on the long bond’s pin action.

 

            Gold’s chart is almost an exact replica of TLT’s. Short term, it has confirmed the break below its 100 DMA and is now in the process of challenging its 200 DMA.  But  on a long term basis, it remains in uptrends across all timeframes.  So, like TLT, I would leave long term positions intact but pay close attention to any further downward move.

      

       

The chart of the dollar is similar to those of TLT and GLD in that short term, it is in a solid downtrend.  The difference is that UUP has done extensive longer term damage to its technical picture.  That it remains in an intermediate term trading range is about the most positive thing one could say about its chart.

            https://www.zerohedge.com/geopolitical/luke-gromen-fed-has-no-good-options-right-now-dollar-sinks-and-deficits-explode

 

                        But beware of lower prices.

            https://www.bloomberg.com/news/articles/2021-01-18/dollar-shorts-mount-before-yellen-outlines-market-based-policy?srnd=premium&sref=loFkkPMQ

                       

 

            With bond, gold and dollar investors continuing to demonstrate concern, it is a bit mystifying that stocks could remain as strong as they have been.  Shows you the power of the Fed.

 

Friday in the charts.

https://www.zerohedge.com/markets/gamma-geddon-sparks-stocks-biggest-weekly-loss-halloween

 

    Fundamental

 

       Headlines

 

              The Economy

 

                         Review of the Week

 

The bulk of the US datapoints last week were negative although there were       two positive primary indicators and none negative.  So, I rate the week as a neutral.  Overseas, the stats were weighted to the plus side.

 

In addition, there was plethora of Fed speak from various regional bank   heads as well as a speech from Powell and the release of the latest FOMC meeting minutes.  As usual we got a lot of the ‘on the one hand…on the other hand’ commentary; but I think (and frankly I am not sure) the ultimate conclusion was that any tapering actions were still in the distant future.

 

Finally, the president elect put forth a new $1.9 trillion stimulus bill.

 

All of this fed the growing reflation fears---which from an economic point of view is not particularly concerning immediately.  However, some Markets (bond and the dollar) are already reflecting mounting apprehension about inflation.  And if it materializes then (1) the Fed may have to taper sooner than it now wants and/or (2) the aforementioned anxiety engulfs the equity market and the jig is up. 

 

Still our base economic scenario remains intact---the US and global economies are improving but not at the velocity of the initial sharp rebound off the bottom.  In other words, a diminishing probability of a ‘V’ shaped recovery which would lessen any potential inflationary pressures and leave the Fed free to continue QEInfinity. 

                       

I am not altering my belief that long term the economy will grow at a historically subpar secular rate due to the twin burdens of egregiously irresponsible fiscal and monetary policies---which, by the way, are becoming even more egregiously irresponsible as a result of measures being taken by the government and the Fed in dealing with the current crisis.

                            http://scottgrannis.blogspot.com/2021/01/last-year-in-nutshell.html

 

                                US

 

                        International

 

The November EU YoY construction output fell 1.3% versus -1.9% in October; January economic sentiment was 58.3 versus 54.4 reported in December.

 

December German CPI was +0.5%, in line; January economic sentiment  was 61.8 versus forecasts of 60.0.

 

Other

 

            Fiscal Policy

 

              David Stockman on the latest stimulus plan.

              https://www.zerohedge.com/political/stockman-why-does-sleepy-joe-think-we-need-another-850-billion-transfer-payments

 

              Spending does not bring prosperity.

              https://www.zerohedge.com/economics/next-wave-spending-will-not-bring-prosperity

 

            The coronavirus

 

              More deaths among the elderly after taking the vaccine.

              https://www.zerohedge.com/covid-19/norway-sounds-alarm-over-vaccine-risks-elderly-frail-after-23-deaths

              

               Unfortunately, there is more.

               https://www.zerohedge.com/covid-19/55-americans-have-died-following-covid-vaccination-norway-deaths-rise-29

 

               Fatality rates and nursing homes.

               https://www.powerlineblog.com/archives/2021/01/covid-fatality-rates-a-different-perspective.php

 

              Study shows lockdowns were not effective in limiting spread of virus.

              https://www.zerohedge.com/markets/stanford-peer-reviewed-study-did-not-find-evidence-lockdowns-were-effective-stopping-covid

 

            Bottom line.  Everyone is in the pool.

                        https://www.zerohedge.com/markets/everyone-pool-more-buyers-needed

 

  Earnings season starts today.

  https://www.zerohedge.com/markets/tomorrow-q4-earnings-begin-earnest-heres-what-expect-and-why-they-dont-matter

 

    News on Stocks in Our Portfolios

           

What I am reading today

           

            Priceless photos.

            Photos 004 (douglascountygensoc.org)

 

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The Morning Call--A clear sign of insanity

 

The Morning Call

 

1/15/21

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/markets/crypto-small-caps-scream-higher-dollar-shrugs-ahead-bidens-budget-bonanza

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

December retail sales fell 0.7% versus expectations of being flat; December PPI was +0.1%versus +0.2%.

                          https://www.zerohedge.com/economics/us-retail-sales-tumble-3rd-straight-month-slump-restaurant-online-spending

 

                        International

 

November UK industrial production fell 1.0% versus estimates of +0.5%; November GDP fell 2.6% versus -5.7%; November manufacturing production was +0.7%, in line; November construction output was -1.4% versus -8.1% and the November trade balance was -L5 billion versus the October reading of -L2.3 billion.

 

                        Other

 

                          The stimulus is stimulating.

                          https://thereformedbroker.com/2021/01/14/surprise-surprise-the-stimulus-is-actually-stimulating/

                      

                          Credit card data show new stimulus backed spending spree.

                         https://www.zerohedge.com/markets/real-time-card-spending-data-shows-next-stimulus-funded-buying-spree-has-arrived

 

                          Global economy enters double dip recession.

                          https://politicalcalculations.blogspot.com/2021/01/global-economy-enters-double-dip.html#.YACSuehKiM8

 

                          Update on seven high frequency economic indicators.

                          https://www.calculatedriskblog.com/2021/01/seven-high-frequency-indicators-for_11.html

 

            The Fed

 

              Talk of tapering is just talk.

                  https://blogs.uoregon.edu/timduyfedwatch/2021/01/13/talk-of-tapering-is-just-talk/

 

              But there is a paradox in tapering talk.

              https://www.zerohedge.com/markets/rates-rhetoric-tapering-paradox

 

            Fiscal Policy

 

              The failure of the college loan program.

              https://americanconsequences.com/the-failure-of-the-college-loan-program/

 

China

 

  What trade war?

  https://www.zerohedge.com/markets/what-trade-war-chinese-trade-surplus-hits-all-time-high-soaring-exports-pandemic-goods

 

            The coronavirus

 

              US coronavirus hospitalizations decline for first time in months.

              https://www.zerohedge.com/covid-19/us-covid-hospitalizations-post-first-drop-monthsbut-bofa-has-some-bad-news

 

              The benefits of taking zinc in fighting the virus.

              https://www.lewrockwell.com/2021/01/no_author/when-no-one-was-looking-dietary-supplements-cured-cancer-covid-19/

 

            Bottom line.  A clear signal of insanity (must read).

              https://compoundadvisors.com/2021/a-clear-signal-of-insanity

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

             A word of caution on bitcoin.

             https://www.advisorperspectives.com/commentaries/2021/01/13/bitcoin-magic-internet-money

 

            Another disbeliever.

            https://marker.medium.com/the-bitcoin-dream-is-dead-8b621d2d7dbd

 

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The Morning Call--Setting the stage for a bitcoin rally

 

The Morning Call

 

1/14/21

 

The Market

         

    Technical

 

            The charts say sell gold rallies.

            https://www.zerohedge.com/the-market-ear/c7bqgkexj

 

            Eurodollar curve chaos.

            https://www.zerohedge.com/markets/eurodollar-curve-chaos-fed-does-full-360-degree-tapering-debate

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/bonds-big-tech-bid-penny-stock-buying-panic-explodes

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          Weekly jobless claims rose to 965,000 versus expectations of 795,000.

                          https://www.zerohedge.com/personal-finance/initial-jobless-claims-soars-highest-august-amid-illinois-chaos

 

The December budget deficit was $144 billion versus $145 billion in November.

 

The Fed released its latest Beige Book report whose tone was a bit more upbeat than its immediate predecessor.  The bad news is that inflation also appears to be recovering.

https://www.zerohedge.com/economics/beige-book-finds-prices-rising-everywhere

 

                        International

 

November Japanese machinery orders were up 1.5% versus estimates of down 6.2%; December PPI was -2.0% versus -2.2%.

 

The December Chinese trade balance was +$78.1 billion versus predictions of +$72.4 billion; December vehicle sales were up 6.4% versus November’s reading of up12.6%.

 

2020 German GDP growth was -5.0% versus forecasts of -5.1%.

 

                        Other

 

                          Philly Fed business cycle index near recession signal.

                          http://www.capitalspectator.com/philly-feds-ads-business-cycle-index-near-a-recession-signal/

 

                          Cleveland Fed key measures show inflation soft in December.

                          https://www.calculatedriskblog.com/2021/01/cleveland-fed-key-measures-show.html

 

                                 Update on global oil supply/demand.

                         https://www.zerohedge.com/commodities/opec-monthly-report-signals-demand-optimism-track-drain-oil-inventories

 

            The Fed

 

              Who wants inflation, you or the Fed?

              https://www.zerohedge.com/personal-finance/inflation-your-best-interest-or-feds

 

            Fiscal Policy

 

              Rumors are that Biden’s stimulus plan will cost $2 trillion.

              https://www.zerohedge.com/markets/yields-surge-stunned-traders-learn-biden-propose-massive-2-trillion-stimulus

 

            The coronavirus

 

              Update on coronavirus stats.

              https://politicalcalculations.blogspot.com/2021/01/ten-months-of-coronavirus-pandemic-in-us.html#.X_9SVOhKiM8

 

            Bottom line.  The stock market doesn’t care.

                        https://americanconsequences.com/the-stock-market-still-doesnt-care/

 

                        Just take the money.

                        https://ofdollarsanddata.com/just-take-the-money/

 

    News on Stocks in Our Portfolios

 

BlackRock (NYSE:BLK): Q4 Non-GAAP EPS of $10.18 beats by $1.15; GAAP EPS of $10.02 beats by $0.90.

Revenue of $4.48B (+12.6% Y/Y) beats by $200M.

 

What I am reading today

 

            The social media’s silent coup.

            https://promarket.org/2021/01/11/facebook-twitter-ban-trump-parler-concentration-power/

 

            The problem with bitcoin as currency.

            https://www.realclearmarkets.com/articles/2021/01/13/bitcoin_what_it_is_isnt_and_where_flawed_money_is_heading_656268.html

 

            Setting the stage for a bitcoin rally.

            https://www.zerohedge.com/markets/setting-stage-bitcoins-rally-above-100000-unexpectedly-low-volatility

 

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